Major Automaker Doubles Down on LFP Technology with $716 Million RMB Gigafactory Investment
On January 22nd, automotive giant Nissan Motor Company unveiled plans to construct a next-generation electric vehicle battery factory in Kitakyushu, Japan. The facility will manufacture cutting-edge lithium iron phosphate (LFP) batteries with an annual production capacity of 5 gigawatt-hours (GWh), representing a substantial investment of 153.3 billion yen (approximately $716 million RMB).?The company aims to integrate these batteries into lightweight electric vehicles as early as 2028.
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Nissan's battery factory initiative is a calculated move. In September 2024, the company secured certification from Japan's Ministry of Economy, Trade and Industry (METI) for developing and mass-producing LFP batteries. At the time, Nissan emphasized its commitment to autonomy, stating that it would not rely on Chinese battery suppliers but instead develop its core electric vehicle battery technology in-house.
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"By developing and mass-producing LFP batteries," Nissan explained, "we aim to strengthen Japan's battery supply chain in line with government policies, and to establish a domestic base for EVs equipped with LFP batteries."
Nissan's Electric Vehicle Strategy
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Historically, Nissan has been conservative in the electric vehicle sector. Despite exploring multiple technological pathways—including battery electric vehicles (BEV), hybrid electric vehicles (HEV), plug-in hybrid electric vehicles (PHEV), and fuel cell technologies—the company has struggled to gain significant traction.?In its mid-term strategy, "The Arc Nissan Plan," the company set an ambitious target of increasing electric vehicle sales to 40% by 2030, with plans to launch multiple PHEV models in the 2025-2026 fiscal year.
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For the Chinese market specifically, Nissan aims to introduce eight new energy vehicle models by the 2026 fiscal year, including five under the Nissan brand.?Nissan’s product lineup in China includes models under various brands such as Nissan (Dongfeng Nissan 东风日产and imports), Venucia（启辰）, and Infiniti（英菲尼迪）.
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Nissan's Financial Performance Struggles
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Nissan's recent financial results paint a challenging picture. The second-quarter 2024 financial report revealed:
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Facing persistent challenges in key markets like China, Nissan dramatically reduced its full-year operating profit forecast from 500 billion yen to 150 billion yen—a staggering 70% decrease which underscores the severity of the situation. The company also downgraded its net sales forecast from 14 trillion yen to 12.7 trillion yen.
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Major Workforce Reductions Planned
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In response to these financial pressures, Nissan has announced a comprehensive restructuring plan:
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Nissan's CEO Makoto Uchida candidly acknowledged the severe market conditions, noting that core vehicle sales have fallen short of expectations. In a remarkable gesture of accountability, he voluntarily reduced his own salary by 50%.
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Merger with Honda Initiated
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In a pivotal development on December 23rd, Nissan and Honda officially initiated merger discussions. The proposed merger involves creating a joint holding company, with both manufacturers becoming subsidiaries. The strategic alliance aims to?achieve combined annual sales exceeding 30 trillion yen and generate annual operating profits surpassing 3 trillion yen.
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Notably, the holding company's board will be majority-nominated by Honda, with Honda maintaining over 50% ownership. The merged entity is scheduled for an initial public offering (IPO) in August 2026, at which point both Nissan and Honda will be delisted.
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These transformative steps underscore Nissan's aggressive strategy to navigate the complex, competitive landscape of the global automotive industry.
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